The Sad State Of The Auto Industry

Last night Vicki and I watched Who Killed the Electric Car? on DVD. I've wanted to see this ever since Tammy first mentioned it a couple of years ago, and it was every bit as interesting as she'd said it was. Seeing the small, dedicated faction of California EV1 (Electric Vehicle 1) drivers who became fanatical about their former cars once General Motors ended the leases on them and pulled the vehicles back in was just amazing. If you aren't familiar with the story, then picture this: a GM compound in California has several dozen of the cars parked in it, awaiting their final fate. Former lease holders on the cars patrol outside the chain link fence, working shifts in order to keep an eye on the small fleet of EV1s lest GM ship them off to be destroyed (as had happened to a previous set of them). This went on for months, and only ended because the car company did, indeed, load them all up on trucks and transport them to a car-crushing site where they were compressed and shredded (while the protesters were arrested for their attempts to block this from happening).

Anyway, as we were going through the Special Features on the DVD, I started doing a little research on what's available right now. I knew that the Toyota Prius was often mentioned as the best option, as well as being an example of "doing it right" (it was a redesigned hybrid, in which the engineers considered all possible sources of energy rather than just slapping a battery and electric motor into an internal combustion-driven vehicle as others have done). I also knew that Honda had something to offer, and we've been a Honda family for about a decade now. What I found was somewhat shocking (to me, at least), and more than a little depressing.

Honda offers 2 hybrid choices, neither of which are a "plug-in hybrid" (meaning that you can't charge the car's electric motor/battery system by hooking up to an electrical outlet; they're only charged by kinetic energy from braking or by storing energy released by the regular engine) (shock # 1). The 2 models are the Civic Hybrid, and the Insight. The base price on the Civic Hybrid is approximately $10,000 more than the base price for the regular Civic (shock # 2). It looked like the model might have been slightly smaller, in terms of interior space (presumably because the internal combustion engine is still there along with an additional electric motor and more batteries). With either of these cars, you'll get better gas mileage but it's an incremental improvement (optimistically: 40%) rather than the revolutionary one that you'd experience with a pure electric (no gas at all) or plug-in hybrid (only use gas when you exhaust your electric charge). In other words: you have to spend $10K more to get about the same or less interior space, and you'd still be putting a significant amount of gas into it (60% or more of what you'd put into a conventional vehicle).

To see if there was any chance that buying a hybrid would eventually represent anything close to a break-even scenario for us, I asked Vicki what we spend on gas each year. Since she's been self-employed for almost a decade now, we have information like that readily available (for income tax purposes). She quickly discovered that we typically go through around $1100/year in gas purchases. If gas went back up a bit in price anytime soon, we might realistically save $500/year by switching to a hybrid. That meant that we'd have to own the car for 20 years just to break even (shock # 3)! And we typically trade in our vehicles about every 5 to 6 years, making that an unlikely outcome.

So then I went looking to see what governmental incentives exist here in Ontario and/or Canada to encourage us to buy hybrids. I thought that there might be an income tax deduction for it (although I hadn't seen one as I did my taxes each year) but instead there's a provincial sales tax rebate available in Ontario, capped at $2000. (And a sales tax rebate makes more sense than an income tax deduction, now that I think about it!) That was a pleasant surprise, as that would knock the price differential down from $10K to $8K (but still required a 16-year ownership to get to break-even). It certainly doesn't come close to some of the incentives that the Bush administration introduced to get small business to buy gas-guzzling SUVs in the early 90s, but I guess it must be harder to get these things into law when it's only the consumer who stands to benefit from it!

As it stands right now, Vicki and I are discussing whether to make our next car a hybrid. We can certainly afford to, and with self-employment there's even the advantage of being able to "write off" some of the (larger) expense in order to save income tax money. I think we're closer to a decision in that direction than ever before, and that's a good thing for everybody on the planet, I guess. My dream situation for us is: solar panels on the roof of our house and a car that charges up in the garage (from the energy coming off the sun). It sounds like we can't quite get there just yet. But is it 2 years away now, or 10?

I also couldn't help but be struck by the irony of watching that DVD at this point in history, as General Motors faces bankruptcy while Chrysler and Ford struggle to survive as a result of their poor choices over the past ten or twenty years. If GM and their competitors in the U.S. had taken the billions of dollars that they spent on lobbyists to fight against seat belt/airbag/fuel efficiency/anti-pollution devices over the last few decades and actually invested that money into making their cars more future-proof, they'd be thriving industries right now.

If I've misstated anything above, feel free to correct my errors in the Comments section. And if you want to read more, there's lot of information available online. I found the California Cars Initiative site for plug-in vehicles particularly interesting and helpful on the topic of where the PHEV (Plug-in Hybrid Electric Vehicle) situation currently stands.